The education of a serial entrepreneur

I first met Albert Lai 15 years ago. I was speaking at a meeting of the North York Chamber of Commerce; he was a local high school student who had created a new type of yearbook using CD-ROMs. As keynote speaker, I was asked to present him with a special entrepreneurship award from the board, to demonstrate how the mainstream business community was engaging with ambitious young entrepreneurs.

By now it’s clear Lai and his generation, now in their thirties, haven’t just joined the business mainstream, they’ve redefined it. Now on his sixth startup, Lai has co-created a company that intends to disrupt an industry that no one in the 1990s ever dreamed of: mobile and Facebook gaming. Last week, London, Ont.-based Big Viking Games announced the upcoming launch of Tiny Kingdoms, a role-playing combat game set in an animated landscape populated by bold knights and warriors, fairies, wizards, dragons and trolls.

Two innovations make Tiny Kingdoms (TK) a game-changer three months before it hits the market. Lai and co-founder Greg Thompson, created the game using HTML5, the multimedia-friendly development tool that lets applications run seamlessly on computers, tablets and smartphones alike. While that decision entailed significant additional upfront investment, Lai believes it will give Kingdoms a competitive advantage and hasten its adoption in the world of social gaming.

In launching a Kickstarter campaign last week to raise $50,000 from avid gameplayers to help “polish” the game prior to release, the company said TK will be the first major online game to incorporate user feedback directly into day-to-day operations.

The development team will continually ask users to vote on which new characters to create, what enhancements should be added, and which new types of combat should be introduced. Lai, whose previous startup was a Facebook-analytics company in San Francisco called Kontagent, says Big Viking will continually monitor user data to upgrade Tiny Kingdoms — giving players a strong voice in game development and, theoretically, increasing engagement levels and extending the product’s lifecycle.

“We’re bringing together the best of the idea that a game can be funded by its players, but also created by the players who funded it,” Lai says. “It’s the first time this is being done on a fully integrated system.”

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In other words, Big Viking is creating a virtuous circle, in which the more they play, the more involvement players get — which should lead to greater engagement, and thus more playing time. That’s a business model any chamber of commerce could understand.

“We are not dependent on the Kickstarter funds,” Lai admits. The goal is to promote the game and rope in early adopters even earlier by offering them special premiums, such as free characters, special privileges and game credits, he says.

These free-to-play virtual world games, which encourage users to spend real money upgrading their characters and customizing their game-playing experience, can be real-world empire builders. Thompson, Lai’s co-founder, created YoVille, one of the first “freemium” games on Facebook. In 2009 he sold it to game-developer Zynga, which used that platform to create some games you may know: FarmVille, FarmVille II, ChefVille, and so on.

San Francisco-based Zynga went public in a US$1-billion IPO in December 2011. While the stock has tumbled since, the company’s annual revenues exceed US$1-billion. Some investors express concern that much of the revenue derives from sales of animated virtual trees and tractors. But as Forbes magazine has pointed out, these assets “are no more imaginary than the 4,000 songs in your iTunes.”

Big Viking is no stranger in this strange land. Its first game, FishWorld, is a virtual aquarium that users enhance by buying or trading for new fish and enhanced designs. Between FishWorld, Mech Force and Dark Heroes, Big Viking claims 40 million users. The company, held by Thomson (chief product officer) and Lai (CEO), has never taken outside capital, and has added more than 40 employees in a little more than a year.

Lai calls Fish World “a solid hit,” and expects TK to enjoy similar success. But if it doesn’t, Big Viking’s half-million-dollar investment has created a technology platform that can be used for developing other games, lowering the costs of future products. “If you build games well, you can create significant residual value,” Lai says. “We’ve derisked game development.”

Lai has been involved in many startups. His success as a partner in MyDesktop.com (sold for about $1-million in 2000) led to venture-funded comparison-shopping site BuyBuddy. Lai then spent time in Silicon Valley working on Idle Agent, a peer-to-peer online storage network that foundered in the tech-bubble aftermath. But his Toronto-based BubbleShare, an online photo-sharing service, was sold in 2006 for about $2-million. That set the stage for Lai to co-found Kontagent, which helps clients — mainly social-game developers such as Ubisoft, Nexon, Konami, and Electronic Arts — track the results of their activity on social media. Kontagent raised $20-million in venture capital and now has about 100 employees.

More comfortable with starting companies than running them, Lai stepped down as Kontagent’s CEO to travel, but got dragged back into business by the opportunity to team up with Thomson. “I want to see how far we can drive this vision,” he says. ” It has taken me six companies to get here, so I think I’m here for a while.”